I'm a Fellow at the Adam Smith Institute in London, a writer here and there on this and that and strangely, one of the global experts on the metal scandium, one of the rare earths. An odd thing to be but someone does have to be such and in this flavour of our universe I am. I have written for The Times, Daily Telegraph, Express, Independent, City AM, Wall Street Journal, Philadelphia Inquirer and online for the ASI, IEA, Social Affairs Unit, Spectator, The Guardian, The Register and Techcentralstation. I've also ghosted pieces for several UK politicians in many of the UK papers, including the Daily Sport.

I Look Forward To The Campaign For Amazon To Receive A Tax Refund

One of the joys in my native UK is in watching the activities of a self-appointed group of tax campaigners. Seeing them tying themselves into knots attempting to insist that everyone should be paying very much more tax than they currently are. Especially those nasty multinational companies. But not, of course, those tax campaigners themselves who have used quite a number of the practices that they themselves campaign against. The near future is going to be most interesting for their own arguments should lead them into campaigning for Amazon to receive a UK tax refund, or at least a credit for tax losses. And this after all their years of insisting that Amazon doesn’t pay enough tax in the UK.

And of course I’m entirely certain that they will follow where their flawless logic leads them. It wouldn’t do to imply that they might have been, how shall we put this, making stuff up for political reasons or whatever.

I refer to groups such as the Tax Justice Network, UKUncut, and people who have advised them like the country’s leading tax expert Richard Murphy. And, of course Margaret, Lady Hodge, the chair of the Public Accounts Committee who seems to have been listening to them all intently.

Their basic contention is that Amazon sells a lot in the UK and that Amazon doesn’t pay very much corporation tax in the UK. Both of these contentions are true. They then propose a solution: we should ignore all the complicated stuff that Amazon does to move revenues around the world and concentrate upon the company as a whole. This is known as “unitary taxation” and according to our intrepid campaigners this is the solution to most ills of modern life up to and including, according to the more excitable of them, a solution to growing inequality. That unitary taxation means ignoring all of the internal structures of the company and looking instead at the global spread of sales (and it can be made more complex by looking at workforce and physical plant if one wishes) and then allocating profit according to that geographic spread.

So, if Amazon’s UK sales are about 10% of Amazon’s global sales, which does appear to be roughly correct, then 10% of Amazon’s profits should be subject to UK corporation tax. That is indeed the system that they recommend, actually campaign for. Which brings us to the interesting part: for of course we’ve just had Amazon’s quarterly results and they show that the company has made a loss. A loss of some $126 million. Using that unitary taxation formula that should mean a loss of $12.6 million is assigned to the UK business. At the 22% rate of corporation tax that means that there should then be a tax loss of $2.77 million attributable to Amazon’s UK activities. Such tax losses are not paid out of course, but are kept and then offset against any future profits that Amazon might make. The company is also predicting losses in future quarters of perhaps $500 million, meaning that we should thus expect there to be a UK tax credit of perhaps another $10 million or so.

Which is where all of this gets interesting. For we are using solely their own logic here and that logic leads to the conclusion that they should be campaigning for Amazon to get those tax credits. And it’s possible to wonder whether they will so campaign.

Tcha! how could we wonder about such a thing? For of course these are honourable men, driven by a burning sense of what is right and just in the tax system. Not simply political hacks out for whatever they can suck out of the grants system. They will indeed be on the airwaves real soon now pointing out how Amazon is paying too much in tax according to their own calculations.

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